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Agglomeration Economies and Business Productivity: an Estimate on French Individual Data


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  • Yoann Barbesol

    (INSEE and École dÉconomie de Paris)

  • Anthony Briant

    (INSEE and École dÉconomie de Paris)

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    The persistent spatial concentration of certain activity sectors is hard to explain without admitting the existence of agglomeration economies. Using three administrative databases on French corporate accounts and employment, we assess the impact on these enterprises total factor productivity of urbanization externalities, i.e., those created from total size, accessibility, and industrial diversity of the location area, and localization externalities, which relate to the level of specialization of an activity area. We find a significant impact of an areas accessibility to the rest of the national market as well of the density of its economic fabric on average productivity. Specialization has powerful local effects, suggesting the existence of localization externalities. Firms are more productive in areas where their industry is relatively more concentrated. The diversity of local economic activities appears to have little influence. Similarly, the degree of local competition does not, on average, affect the productivity of firms in a cluster.

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    Bibliographic Info

    Article provided by Institut National de la Statistique et des Etudes Economiques in its journal Economie et Statistique.

    Volume (Year): 419-420 (2009)
    Issue (Month): (August)
    Pages: 31-54

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    Handle: RePEc:crs:ecosta:es419-420c

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    Related research

    Keywords: Enterprises total factor productivity; Agglomeration; Urbanization Externalities; Localization Externalities;

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    1. Starrett, David, 1978. "Market allocations of location choice in a model with free mobility," Journal of Economic Theory, Elsevier, Elsevier, vol. 17(1), pages 21-37, February.
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